How to calculate the overnight interest of Leyte currency
Publish: 2021-05-19 08:10:53
1. Calculation of overnight interest
the first method of folding
I: for the combination of USD [US dollar] as the target currency, such as GBP / USD [US dollar]: assume that it is a 10k account, buy three hands of GBP / USD [US dollar] on Monday, and the market price is 1.7718/1.7722. The position is held overnight until Tuesday, and PRM buy% is 0.42, The calculation method of overnight foreign exchange interest is as follows:
0.42% / 360x10000x3 hand x1.7722x1 days = $0.62
2: for the combination of USD [US dollar] [US dollar] as the base currency, such as USD [US dollar] / JPY: assuming 100k account, short selling USD [US dollar] / JPY on Wednesday, the market price is 107.44/107.47, PRM sell% - 2.18 from overnight to Thursday, then the customer selling US dollar will pay interest, The calculation method of foreign exchange overnight interest is as follows:
- 2.18% / 360x1000000x3 days = [$18.17]
3: for cross currency combination, such as EUR / GBP: suppose it is 1K account, buy 5 hands of EUR / GBP on Friday, the market price is 0.6885/0.6890, PRM buyl% - 3.71 from overnight to next Monday, then customers who buy euro will pay interest, The calculation method of foreign exchange overnight interest is as follows:
- 3.71% / 360x1000x5 hand x0.6890x1 day = [￡ 0.355] = [$0.63]
fold the second method
If: NZDUSD 0.6500
NZD overnight interest rate 6.0% p.a.
USD overnight interest rate 2.0% p.a.
calculation interest margin of overnight interest = forward exchange rate current exchange rate
= 0.649929 - 0.6500
= - 0.000071 or - 0.71 points
if buy New Zealand The interest margin is:
NZD 100000 * 0.000071 = USD 7.10
or:
NZD overnight interest income - USD overnight interest payment
= (NZD 16.44 * 0.649929) - USD 3.61
= USD 10.68 - USD 3.61
= USD 7.10
if selling New Zealand dollar, the interest margin must be paid, and the number of interest margins will vary according to the difference between deposit and loan interest rates or the difference between interest margin trading
the third method of folding
the first method of folding
I: for the combination of USD [US dollar] as the target currency, such as GBP / USD [US dollar]: assume that it is a 10k account, buy three hands of GBP / USD [US dollar] on Monday, and the market price is 1.7718/1.7722. The position is held overnight until Tuesday, and PRM buy% is 0.42, The calculation method of overnight foreign exchange interest is as follows:
0.42% / 360x10000x3 hand x1.7722x1 days = $0.62
2: for the combination of USD [US dollar] [US dollar] as the base currency, such as USD [US dollar] / JPY: assuming 100k account, short selling USD [US dollar] / JPY on Wednesday, the market price is 107.44/107.47, PRM sell% - 2.18 from overnight to Thursday, then the customer selling US dollar will pay interest, The calculation method of foreign exchange overnight interest is as follows:
- 2.18% / 360x1000000x3 days = [$18.17]
3: for cross currency combination, such as EUR / GBP: suppose it is 1K account, buy 5 hands of EUR / GBP on Friday, the market price is 0.6885/0.6890, PRM buyl% - 3.71 from overnight to next Monday, then customers who buy euro will pay interest, The calculation method of foreign exchange overnight interest is as follows:
- 3.71% / 360x1000x5 hand x0.6890x1 day = [￡ 0.355] = [$0.63]
fold the second method
If: NZDUSD 0.6500
NZD overnight interest rate 6.0% p.a.
USD overnight interest rate 2.0% p.a.
calculation interest margin of overnight interest = forward exchange rate current exchange rate
= 0.649929 - 0.6500
= - 0.000071 or - 0.71 points
if buy New Zealand The interest margin is:
NZD 100000 * 0.000071 = USD 7.10
or:
NZD overnight interest income - USD overnight interest payment
= (NZD 16.44 * 0.649929) - USD 3.61
= USD 10.68 - USD 3.61
= USD 7.10
if selling New Zealand dollar, the interest margin must be paid, and the number of interest margins will vary according to the difference between deposit and loan interest rates or the difference between interest margin trading
the third method of folding
2. The overnight interest is based on the bank's lending rate. The transaction proct you operate is indirect currency. Is the indirect currency quoted in US dollars, so the overnight interest will be higher
and you know, if your list is on Wednesday, the overnight interest rate is three times the normal rate. Because they charge overnight interest on Friday, Saturday and Sunday
nine years of experience in precious metal instry analysis and operation. I know this market very well. If you have any questions, please feel free to ask me. Finally, I send you 16 words of truth: cash is the king, homeopathy is the king, point position is the phase, stop loss is the saint.
and you know, if your list is on Wednesday, the overnight interest rate is three times the normal rate. Because they charge overnight interest on Friday, Saturday and Sunday
nine years of experience in precious metal instry analysis and operation. I know this market very well. If you have any questions, please feel free to ask me. Finally, I send you 16 words of truth: cash is the king, homeopathy is the king, point position is the phase, stop loss is the saint.
3. Calculation of overnight interest
the first method of folding
I: for the combination of USD [US dollar] as the target currency, such as GBP / USD [US dollar]: assume that it is a 10k account, buy three hands of GBP / USD [US dollar] on Monday, and the market price is 1.7718/1.7722. The position is held overnight until Tuesday, and PRM buy% is 0.42, The calculation method of overnight foreign exchange interest is as follows:
0.42% / 360x10000x3 hand x1.7722x1 days = $0.62
2: for the combination of USD [US dollar] [US dollar] as the base currency, such as USD [US dollar] / JPY: assuming 100k account, short selling USD [US dollar] / JPY on Wednesday, the market price is 107.44/107.47, PRM sell% - 2.18 from overnight to Thursday, then the customer selling US dollar will pay interest, The calculation method of foreign exchange overnight interest is as follows:
- 2.18% / 360x1000000x3 days = [$18.17]
3: for cross currency combination, such as EUR / GBP: suppose it is 1K account, buy 5 hands of EUR / GBP on Friday, the market price is 0.6885/0.6890, PRM buyl% - 3.71 from overnight to next Monday, then customers who buy euro will pay interest, The calculation method of foreign exchange overnight interest is as follows:
- 3.71% / 360x1000x5 hand x0.6890x1 day = [￡ 0.355] = [$0.63]
fold the second method
If: NZDUSD 0.6500
NZD overnight interest rate 6.0% p.a.
USD overnight interest rate 2.0% p.a.
calculation interest margin of overnight interest = forward exchange rate current exchange rate
= 0.649929 - 0.6500
= - 0.000071 or - 0.71 points
if buy New Zealand The interest margin is:
NZD 100000 * 0.000071 = USD 7.10
or:
NZD overnight interest income - USD overnight interest payment
= (NZD 16.44 * 0.649929) - USD 3.61
= USD 10.68 - USD 3.61
= USD 7.10
if selling New Zealand dollar, the interest margin must be paid, and the number of interest margins will vary according to the difference between deposit and loan interest rates or the difference between interest margin trading
fold the third method
swap = spread
A = fixed currency interest rate
b = floating currency interest rate
s = current interest rate
t = days of holding
DB = days of fixed currency year
the first method of folding
I: for the combination of USD [US dollar] as the target currency, such as GBP / USD [US dollar]: assume that it is a 10k account, buy three hands of GBP / USD [US dollar] on Monday, and the market price is 1.7718/1.7722. The position is held overnight until Tuesday, and PRM buy% is 0.42, The calculation method of overnight foreign exchange interest is as follows:
0.42% / 360x10000x3 hand x1.7722x1 days = $0.62
2: for the combination of USD [US dollar] [US dollar] as the base currency, such as USD [US dollar] / JPY: assuming 100k account, short selling USD [US dollar] / JPY on Wednesday, the market price is 107.44/107.47, PRM sell% - 2.18 from overnight to Thursday, then the customer selling US dollar will pay interest, The calculation method of foreign exchange overnight interest is as follows:
- 2.18% / 360x1000000x3 days = [$18.17]
3: for cross currency combination, such as EUR / GBP: suppose it is 1K account, buy 5 hands of EUR / GBP on Friday, the market price is 0.6885/0.6890, PRM buyl% - 3.71 from overnight to next Monday, then customers who buy euro will pay interest, The calculation method of foreign exchange overnight interest is as follows:
- 3.71% / 360x1000x5 hand x0.6890x1 day = [￡ 0.355] = [$0.63]
fold the second method
If: NZDUSD 0.6500
NZD overnight interest rate 6.0% p.a.
USD overnight interest rate 2.0% p.a.
calculation interest margin of overnight interest = forward exchange rate current exchange rate
= 0.649929 - 0.6500
= - 0.000071 or - 0.71 points
if buy New Zealand The interest margin is:
NZD 100000 * 0.000071 = USD 7.10
or:
NZD overnight interest income - USD overnight interest payment
= (NZD 16.44 * 0.649929) - USD 3.61
= USD 10.68 - USD 3.61
= USD 7.10
if selling New Zealand dollar, the interest margin must be paid, and the number of interest margins will vary according to the difference between deposit and loan interest rates or the difference between interest margin trading
fold the third method
swap = spread
A = fixed currency interest rate
b = floating currency interest rate
s = current interest rate
t = days of holding
DB = days of fixed currency year
4. The generation of overnight interest
when we deposit our funds in the bank, we will generate deposit interest, while when we borrow from the bank, we will generate loan interest. Foreign exchange transactions buy currency pairs. When you buy euro / US dollar, you actually buy (deposit) euro and sell (borrow) US dollar to pay for the transaction. Therefore, whenever overnight, there will be overnight interest. Of course, if you build and close a position on the same trading day, there is no overnight interest
is the overnight interest income or expense
when the customer holds the order overnight, the overnight interest will be generated. The positive value indicates that you can get a certain amount of overnight interest, and the negative value indicates that you need to pay a certain amount of overnight interest. Why are there positive and negative
each foreign exchange transaction involves two currencies, and each currency has its own interest rate. When the interest rate of the purchased currency is higher than that of the sold currency, you can earn overnight interest ("positive overnight interest"). But if the interest rate of the bought currency is lower than that of the sold currency, you need to pay overnight interest ("negative overnight interest")
therefore, overnight interest may increase your transaction cost and your profit<
calculation time of overnight interest
the calculation time of overnight interest is displayed in different time zones on the websites of different brokers. The main reason is that the locations of brokers' companies are different, but in fact they are all one point
as shown on McKenzie's website, 5:00 p.m. Eastern (New York) time is converted to 5:00 a.m. Beijing time; Ruixun bank is 23:00 CET, converted to Beijing time is also 5:00 am Beijing time; Gkfx will settle at 10:00 p.m. British time every day, which is converted to 5:00 a.m. Beijing time
of course, these are all summer time, and winter time is 6 a.m. Beijing time. So for the settlement time, it will be 5:00 a.m. Beijing time in summer time (current time) and 6:00 a.m. Beijing time in winter time
based on daylight saving time, any position created at 5:00 a.m. will be regarded as overnight position and overnight interest will be calculated. For positions established at 5:01 am, overnight interest will be calculated the next day; For positions established at 4:59 a.m., overnight interest is calculated at 5:00 p.m<
calculation of overnight interest
on the calculation of overnight interest, some brokers provide direct amount, while some brokers provide interest rate,
calculation of direct amount:
the quoted price of selling and buying overnight interest of Euro and US dollar on that day is: 0.64-1.800,
then it means: when your position is selling one euro and US dollar, Then your trading account will get $0.64. When you buy one hand of Euro dollars, your trading account will need to pay $1.80.
calculation of interest rate:
let's take an example: suppose you buy three hands of GBP / USD on Monday, the market price is 1.7718/1.7722, and you stay overnight until Tuesday, where the pound is a high interest currency, The interest rate of the US dollar is lower than that of the British pound. For example, if the interest difference is prmbuy 0.42% (annual interest difference), the customers who hold pounds will earn interest,
the calculation method is as follows: 0.42% / 360x10000x3 hand x1.7722x1 days = $0.62, that is, the average annual interest to day * corresponding account funds * hands * buy (sell) price * interest days
Where does the interest rate come from? Some are offered by a number of banks, in accordance with the interest rate swap. Generally, the interest rate will not change in the current day. However, when the market is extremely volatile, the interest rate may change in the current day<
triple interest rate on Wednesday
most banks around the world are closed on Saturdays and Sundays, so overnight interest on foreign exchange positions is not calculated for these two days, but most banks still calculate the interest for these two days. For this reason, the foreign exchange market will calculate the three-day interest on the overnight position on Wednesday, so the interest on the overnight position on Wednesday is generally three times that on the overnight position on Tuesday
why Wednesday
this is mainly because according to international practice, foreign exchange transactions are settled after two trading days
Monday: one day overnight interest. Trading on Monday, settlement on Wednesday, position on Monday to Tuesday, settlement day from Wednesday to Thursday, so 1 day interest should be paid / charged
Tuesday: one day overnight interest. Positions are held from Tuesday to Wednesday, and the settlement date is from Thursday to Friday, so 1 day interest is paid / charged
Wednesday: 3-day overnight interest. The position is open from Wednesday to Thursday, and the settlement day is from Friday to next Monday, so the interest is paid / charged for 3 days
Thursday: one day overnight interest. Positions are held from Thursday to Friday, and the settlement day is from next Monday to next Tuesday, so 1 day interest is paid / charged
Friday: one day overnight interest. The position is open from Friday to next Monday, and the settlement day is from Tuesday to Wednesday, so only one day interest is paid / charged
it should be noted that the overnight interest of some currency pairs on some brokers is calculated as three-day interest on Thursday<
for holidays
there is no overnight interest on holidays, but the overnight interest for an extra day is calculated two working days before the holiday. Generally speaking, when the currency involved in the transaction encounters an important holiday in its country, the overnight holiday interest will be calculated. For example, on the fourth of July, the Bank of America suspended its business, and the positions of all dollar currency pairs were located at 5:00 p.m. on the first of July to calculate the overnight interest for an extra day
carry trade
when we talked about currency pairs in detail, we once said why high interest currencies should be divided separately. An important reason is that there is the possibility of carry trade in high interest currencies. At the same time, we can make use of the interest rate gap of different countries and the high leverage advantage available in the foreign exchange market to realize the carry trade< Summary:
1. High interest currency and high leverage make carry trade possible
2. Most of the time, there is triple interest on Wednesdays, but some currency pairs of brokers will do triple interest on Thursdays. You should pay attention to it
3. Pay attention to the interest multiple ring holidays
4. Some of the same currency pairs, whether you sell or buy, may have negative interest rates. The main reason is that the buying and selling interest rates of the two currencies are different. In fact, it is also the comparison of the four interest rates. The interest rate of buying currency a is the interest rate of selling currency B; Interest rate for buying currency B - interest rate for selling currency a.
when we deposit our funds in the bank, we will generate deposit interest, while when we borrow from the bank, we will generate loan interest. Foreign exchange transactions buy currency pairs. When you buy euro / US dollar, you actually buy (deposit) euro and sell (borrow) US dollar to pay for the transaction. Therefore, whenever overnight, there will be overnight interest. Of course, if you build and close a position on the same trading day, there is no overnight interest
is the overnight interest income or expense
when the customer holds the order overnight, the overnight interest will be generated. The positive value indicates that you can get a certain amount of overnight interest, and the negative value indicates that you need to pay a certain amount of overnight interest. Why are there positive and negative
each foreign exchange transaction involves two currencies, and each currency has its own interest rate. When the interest rate of the purchased currency is higher than that of the sold currency, you can earn overnight interest ("positive overnight interest"). But if the interest rate of the bought currency is lower than that of the sold currency, you need to pay overnight interest ("negative overnight interest")
therefore, overnight interest may increase your transaction cost and your profit<
calculation time of overnight interest
the calculation time of overnight interest is displayed in different time zones on the websites of different brokers. The main reason is that the locations of brokers' companies are different, but in fact they are all one point
as shown on McKenzie's website, 5:00 p.m. Eastern (New York) time is converted to 5:00 a.m. Beijing time; Ruixun bank is 23:00 CET, converted to Beijing time is also 5:00 am Beijing time; Gkfx will settle at 10:00 p.m. British time every day, which is converted to 5:00 a.m. Beijing time
of course, these are all summer time, and winter time is 6 a.m. Beijing time. So for the settlement time, it will be 5:00 a.m. Beijing time in summer time (current time) and 6:00 a.m. Beijing time in winter time
based on daylight saving time, any position created at 5:00 a.m. will be regarded as overnight position and overnight interest will be calculated. For positions established at 5:01 am, overnight interest will be calculated the next day; For positions established at 4:59 a.m., overnight interest is calculated at 5:00 p.m<
calculation of overnight interest
on the calculation of overnight interest, some brokers provide direct amount, while some brokers provide interest rate,
calculation of direct amount:
the quoted price of selling and buying overnight interest of Euro and US dollar on that day is: 0.64-1.800,
then it means: when your position is selling one euro and US dollar, Then your trading account will get $0.64. When you buy one hand of Euro dollars, your trading account will need to pay $1.80.
calculation of interest rate:
let's take an example: suppose you buy three hands of GBP / USD on Monday, the market price is 1.7718/1.7722, and you stay overnight until Tuesday, where the pound is a high interest currency, The interest rate of the US dollar is lower than that of the British pound. For example, if the interest difference is prmbuy 0.42% (annual interest difference), the customers who hold pounds will earn interest,
the calculation method is as follows: 0.42% / 360x10000x3 hand x1.7722x1 days = $0.62, that is, the average annual interest to day * corresponding account funds * hands * buy (sell) price * interest days
Where does the interest rate come from? Some are offered by a number of banks, in accordance with the interest rate swap. Generally, the interest rate will not change in the current day. However, when the market is extremely volatile, the interest rate may change in the current day<
triple interest rate on Wednesday
most banks around the world are closed on Saturdays and Sundays, so overnight interest on foreign exchange positions is not calculated for these two days, but most banks still calculate the interest for these two days. For this reason, the foreign exchange market will calculate the three-day interest on the overnight position on Wednesday, so the interest on the overnight position on Wednesday is generally three times that on the overnight position on Tuesday
why Wednesday
this is mainly because according to international practice, foreign exchange transactions are settled after two trading days
Monday: one day overnight interest. Trading on Monday, settlement on Wednesday, position on Monday to Tuesday, settlement day from Wednesday to Thursday, so 1 day interest should be paid / charged
Tuesday: one day overnight interest. Positions are held from Tuesday to Wednesday, and the settlement date is from Thursday to Friday, so 1 day interest is paid / charged
Wednesday: 3-day overnight interest. The position is open from Wednesday to Thursday, and the settlement day is from Friday to next Monday, so the interest is paid / charged for 3 days
Thursday: one day overnight interest. Positions are held from Thursday to Friday, and the settlement day is from next Monday to next Tuesday, so 1 day interest is paid / charged
Friday: one day overnight interest. The position is open from Friday to next Monday, and the settlement day is from Tuesday to Wednesday, so only one day interest is paid / charged
it should be noted that the overnight interest of some currency pairs on some brokers is calculated as three-day interest on Thursday<
for holidays
there is no overnight interest on holidays, but the overnight interest for an extra day is calculated two working days before the holiday. Generally speaking, when the currency involved in the transaction encounters an important holiday in its country, the overnight holiday interest will be calculated. For example, on the fourth of July, the Bank of America suspended its business, and the positions of all dollar currency pairs were located at 5:00 p.m. on the first of July to calculate the overnight interest for an extra day
carry trade
when we talked about currency pairs in detail, we once said why high interest currencies should be divided separately. An important reason is that there is the possibility of carry trade in high interest currencies. At the same time, we can make use of the interest rate gap of different countries and the high leverage advantage available in the foreign exchange market to realize the carry trade< Summary:
1. High interest currency and high leverage make carry trade possible
2. Most of the time, there is triple interest on Wednesdays, but some currency pairs of brokers will do triple interest on Thursdays. You should pay attention to it
3. Pay attention to the interest multiple ring holidays
4. Some of the same currency pairs, whether you sell or buy, may have negative interest rates. The main reason is that the buying and selling interest rates of the two currencies are different. In fact, it is also the comparison of the four interest rates. The interest rate of buying currency a is the interest rate of selling currency B; Interest rate for buying currency B - interest rate for selling currency a.
5. Each platform is different, mainly calculated by the overnight interest of European currency and local currency
6. When doing foreign exchange, if we have an overnight list, the platform often has corresponding interest, positive means that you earn interest, negative means that the platform dects your interest, then how does the interest come from and how is it calculated
first of all, every currency has a transaction interest, just like you need to earn interest when you deposit money in the bank, and you need to repay the bank interest when you borrow money
overnight interest on foreign exchange is the same, but it is a little more complicated than the calculation of interest by the banks we often contact because it is the collection and payment interest between a currency pair, but the reason is the same. Buying a currency is equivalent to depositing a currency in the foreign exchange platform. Selling a currency is equivalent to borrowing a currency from the foreign exchange platform, and we have to pay interest. If you buy or sell any currency pair, you will receive interest on the currency you buy and pay interest on the currency you sell; The interest difference between two currencies (receive interest - pay interest) is the overnight interest received and paid every day.
in this way, if the interest of the currency you buy is higher than that of the currency you sell, you will receive interest. Conversely, if the interest of the currency you buy is lower than that of the currency you sell, you will pay interest, that is, the platform will dect your interest. This is the origin and development of interest on the foreign exchange platform
I think it's easy to understand. How to calculate the overnight interest
overnight interest calculation formula:
for the combination of USD as the target currency:
for example: GBP / USD: suppose it is a 10k (Mini Hand 0.1 hand) account, buy three GBP / USD on Monday, the market price is 1.7718/1.7722, hold overnight until Tuesday, where pound sterling is a high interest currency, and the interest of dollar is lower than pound sterling. For example, if the interest difference is prmbuy 0.42% (annual interest difference), the customers who hold pounds will earn interest,
the calculation method is as follows: 0.42% / 360x10000x3 hand x1.7722x1 days = $0.62, that is, the average annual interest to day * corresponding account funds * hands * buy (sell) price * interest days<
for the combination of USD as the base currency:
for example, if the USD / JPY account is 100k (standard hand, 1 standard hand), and one hand USD / JPY is short on Wednesday, the market price is 107.44/107.47, overnight to Thursday, prmsell% - 2.18, then the customers who sell US dollars will pay interest,
the calculation method is as follows:
- 2.18% / 360x1000000x1 hand x 3 days = $18.17) (special note: on Thursdays, the overnight interest added or subtracted will be three times as much as that on weekdays, because the delivery actually takes place on Monday, 2 days after the weekend.)
for cross currency combination:
for example, if the account is 1K (0.01 hand), five hands of EUR / GBP are bought on Friday, and the market price is 0.6885/0.6890, and prmbuy% - 3.71 from overnight to next Monday, the customers who buy euro will pay interest, The calculation method is as follows:
- 3.71% / 360x1000x5 hand x0.6890x1 day = (￡ 0.355) = ($0.63)
if the customer is a long (holding) high interest currency, the overnight interest of the open position will be added to the capital of the account. On the contrary, the relevant overnight interest will be dected from the funds
according to international banking practice, foreign exchange transactions are settled in two trading days. Overnight interest is calculated on the settlement date
Monday: one day overnight interest. Trading on Monday, settlement on Wednesday, position on Monday to Tuesday, settlement day from Wednesday to Thursday, so 1 day interest should be paid / charged
Tuesday: one day overnight interest. Positions are held from Tuesday to Wednesday, and the settlement date is from Thursday to Friday, so 1 day interest is paid / charged
Wednesday: 3-day overnight interest. The position is open from Wednesday to Thursday, and the settlement day is from Friday to next Monday, so the interest is paid / charged for 3 days
Thursday: one day overnight interest. Positions are held from Thursday to Friday, and the settlement day is from next Monday to next Tuesday, so 1 day interest is paid / charged
Friday: one day overnight interest. The position is open from Friday to next Monday, and the settlement day is from Tuesday to Wednesday, so only one day interest is paid / charged
first of all, every currency has a transaction interest, just like you need to earn interest when you deposit money in the bank, and you need to repay the bank interest when you borrow money
overnight interest on foreign exchange is the same, but it is a little more complicated than the calculation of interest by the banks we often contact because it is the collection and payment interest between a currency pair, but the reason is the same. Buying a currency is equivalent to depositing a currency in the foreign exchange platform. Selling a currency is equivalent to borrowing a currency from the foreign exchange platform, and we have to pay interest. If you buy or sell any currency pair, you will receive interest on the currency you buy and pay interest on the currency you sell; The interest difference between two currencies (receive interest - pay interest) is the overnight interest received and paid every day.
in this way, if the interest of the currency you buy is higher than that of the currency you sell, you will receive interest. Conversely, if the interest of the currency you buy is lower than that of the currency you sell, you will pay interest, that is, the platform will dect your interest. This is the origin and development of interest on the foreign exchange platform
I think it's easy to understand. How to calculate the overnight interest
overnight interest calculation formula:
for the combination of USD as the target currency:
for example: GBP / USD: suppose it is a 10k (Mini Hand 0.1 hand) account, buy three GBP / USD on Monday, the market price is 1.7718/1.7722, hold overnight until Tuesday, where pound sterling is a high interest currency, and the interest of dollar is lower than pound sterling. For example, if the interest difference is prmbuy 0.42% (annual interest difference), the customers who hold pounds will earn interest,
the calculation method is as follows: 0.42% / 360x10000x3 hand x1.7722x1 days = $0.62, that is, the average annual interest to day * corresponding account funds * hands * buy (sell) price * interest days<
for the combination of USD as the base currency:
for example, if the USD / JPY account is 100k (standard hand, 1 standard hand), and one hand USD / JPY is short on Wednesday, the market price is 107.44/107.47, overnight to Thursday, prmsell% - 2.18, then the customers who sell US dollars will pay interest,
the calculation method is as follows:
- 2.18% / 360x1000000x1 hand x 3 days = $18.17) (special note: on Thursdays, the overnight interest added or subtracted will be three times as much as that on weekdays, because the delivery actually takes place on Monday, 2 days after the weekend.)
for cross currency combination:
for example, if the account is 1K (0.01 hand), five hands of EUR / GBP are bought on Friday, and the market price is 0.6885/0.6890, and prmbuy% - 3.71 from overnight to next Monday, the customers who buy euro will pay interest, The calculation method is as follows:
- 3.71% / 360x1000x5 hand x0.6890x1 day = (￡ 0.355) = ($0.63)
if the customer is a long (holding) high interest currency, the overnight interest of the open position will be added to the capital of the account. On the contrary, the relevant overnight interest will be dected from the funds
according to international banking practice, foreign exchange transactions are settled in two trading days. Overnight interest is calculated on the settlement date
Monday: one day overnight interest. Trading on Monday, settlement on Wednesday, position on Monday to Tuesday, settlement day from Wednesday to Thursday, so 1 day interest should be paid / charged
Tuesday: one day overnight interest. Positions are held from Tuesday to Wednesday, and the settlement date is from Thursday to Friday, so 1 day interest is paid / charged
Wednesday: 3-day overnight interest. The position is open from Wednesday to Thursday, and the settlement day is from Friday to next Monday, so the interest is paid / charged for 3 days
Thursday: one day overnight interest. Positions are held from Thursday to Friday, and the settlement day is from next Monday to next Tuesday, so 1 day interest is paid / charged
Friday: one day overnight interest. The position is open from Friday to next Monday, and the settlement day is from Tuesday to Wednesday, so only one day interest is paid / charged
7. The calculation formula of overnight interest is:
overnight interest = annual interest rate difference / 360 days × 1 hand standard × Hand count × Opening price × Interest days
(different platforms with different annual interest rate differences have different regulations, and the specific standards should be referred to)
the first-hand standard of foreign exchange is 100000; Gold is 100; Silver is 5000.
on Monday: 1 day overnight interest. Trading on Monday, settlement on Wednesday, position on Monday to Tuesday, settlement day from Wednesday to Thursday, so 1 day interest should be paid / charged
Tuesday: one day overnight interest. Positions are held from Tuesday to Wednesday, and the settlement date is from Thursday to Friday, so 1 day interest is paid / charged
Wednesday: 3-day overnight interest. The position is open from Wednesday to Thursday, and the settlement day is from Friday to next Monday, so the interest is paid / charged for 3 days
Thursday: one day overnight interest. Positions are held from Thursday to Friday, and the settlement day is from next Monday to next Tuesday, so 1 day interest is paid / charged
Friday: one day overnight interest. The position is open from Friday to next Monday, and the settlement day is from Tuesday to Wednesday, so only one day interest is paid / charged.
overnight interest = annual interest rate difference / 360 days × 1 hand standard × Hand count × Opening price × Interest days
(different platforms with different annual interest rate differences have different regulations, and the specific standards should be referred to)
the first-hand standard of foreign exchange is 100000; Gold is 100; Silver is 5000.
on Monday: 1 day overnight interest. Trading on Monday, settlement on Wednesday, position on Monday to Tuesday, settlement day from Wednesday to Thursday, so 1 day interest should be paid / charged
Tuesday: one day overnight interest. Positions are held from Tuesday to Wednesday, and the settlement date is from Thursday to Friday, so 1 day interest is paid / charged
Wednesday: 3-day overnight interest. The position is open from Wednesday to Thursday, and the settlement day is from Friday to next Monday, so the interest is paid / charged for 3 days
Thursday: one day overnight interest. Positions are held from Thursday to Friday, and the settlement day is from next Monday to next Tuesday, so 1 day interest is paid / charged
Friday: one day overnight interest. The position is open from Friday to next Monday, and the settlement day is from Tuesday to Wednesday, so only one day interest is paid / charged.
8. The generation of overnight interest
when we deposit our funds in the bank, we will generate deposit interest, while when we borrow from the bank, we will generate loan interest. Foreign exchange transactions buy currency pairs. When you buy euro / US dollar, you actually buy (deposit) euro and sell (borrow) US dollar to pay for the transaction. Therefore, whenever overnight, there will be overnight interest. Of course, if you build and close a position on the same trading day, there is no overnight interest
is the overnight interest income or expense
when the customer holds the order overnight, the overnight interest will be generated. The positive value indicates that you can get a certain amount of overnight interest, and the negative value indicates that you need to pay a certain amount of overnight interest. Why are there positive and negative
each foreign exchange transaction involves two currencies, and each currency has its own interest rate. When the interest rate of the purchased currency is higher than that of the sold currency, you can earn overnight interest ("positive overnight interest"). But if the interest rate of the bought currency is lower than that of the sold currency, you need to pay overnight interest ("negative overnight interest")
therefore, overnight interest may increase your transaction cost and your profit<
calculation time of overnight interest
the calculation time of overnight interest is displayed in different time zones on the websites of different brokers. The main reason is that the locations of brokers' companies are different, but in fact they are all one point
as shown on McKenzie's website, 5:00 p.m. Eastern (New York) time is converted to 5:00 a.m. Beijing time; Ruixun bank is 23:00 CET, converted to Beijing time is also 5:00 am Beijing time; Gkfx will settle at 10:00 p.m. British time every day, which is converted to 5:00 a.m. Beijing time
of course, these are all summer time, and winter time is 6 a.m. Beijing time. So for the settlement time, it will be 5:00 a.m. Beijing time in summer time (current time) and 6:00 a.m. Beijing time in winter time
based on daylight saving time, any position created at 5:00 a.m. will be regarded as overnight position and overnight interest will be calculated. For positions established at 5:01 am, overnight interest will be calculated the next day; For positions established at 4:59 a.m., overnight interest is calculated at 5:00 p.m<
calculation of overnight interest
on the calculation of overnight interest, some brokers provide direct amount, while some brokers provide interest rate,
calculation of direct amount:
the quoted price of selling and buying overnight interest of Euro and US dollar on that day is: 0.64-1.800,
then it means: when your position is selling one euro and US dollar, Then your trading account will get $0.64. When you buy one hand of Euro dollars, your trading account will need to pay $1.80.
calculation of interest rate:
let's take an example: suppose you buy three hands of GBP / USD on Monday, the market price is 1.7718/1.7722, and you stay overnight until Tuesday, where the pound is a high interest currency, The interest rate of the US dollar is lower than that of the British pound. For example, if the interest difference is prmbuy 0.42% (annual interest difference), the customers who hold pounds will earn interest,
the calculation method is as follows: 0.42% / 360x10000x3 hand x1.7722x1 days = $0.62, that is, the average annual interest to day * corresponding account funds * hands * buy (sell) price * interest days
Where does the interest rate come from? Some are offered by a number of banks, in accordance with the interest rate swap. Generally, the interest rate will not change in the current day. However, when the market is extremely volatile, the interest rate may change in the current day<
triple interest rate on Wednesday
most banks around the world are closed on Saturdays and Sundays, so overnight interest on foreign exchange positions is not calculated for these two days, but most banks still calculate the interest for these two days. For this reason, the foreign exchange market will calculate the three-day interest on the overnight position on Wednesday, so the interest on the overnight position on Wednesday is generally three times that on the overnight position on Tuesday
why Wednesday
this is mainly because according to international practice, foreign exchange transactions are settled after two trading days
Monday: one day overnight interest. Trading on Monday, settlement on Wednesday, position on Monday to Tuesday, settlement day from Wednesday to Thursday, so 1 day interest should be paid / charged
Tuesday: one day overnight interest. Positions are held from Tuesday to Wednesday, and the settlement date is from Thursday to Friday, so 1 day interest is paid / charged
Wednesday: 3-day overnight interest. The position is open from Wednesday to Thursday, and the settlement day is from Friday to next Monday, so the interest is paid / charged for 3 days
Thursday: one day overnight interest. Positions are held from Thursday to Friday, and the settlement day is from next Monday to next Tuesday, so 1 day interest is paid / charged
Friday: one day overnight interest. The position is open from Friday to next Monday, and the settlement day is from Tuesday to Wednesday, so only one day interest is paid / charged
it should be noted that the overnight interest of some currency pairs on some brokers is calculated as three-day interest on Thursday<
for holidays
there is no overnight interest on holidays, but the overnight interest for an extra day is calculated two working days before the holiday. Generally speaking, when the currency involved in the transaction encounters an important holiday in its country, the overnight holiday interest will be calculated. For example, on the fourth of July, the Bank of America suspended its business, and the positions of all dollar currency pairs were located at 5:00 p.m. on the first of July to calculate the overnight interest for an extra day
carry trade
when we talked about currency pairs in detail, we once said why high interest currencies should be divided separately. An important reason is that there is the possibility of carry trade in high interest currencies. At the same time, we can make use of the interest rate gap of different countries and the high leverage advantage available in the foreign exchange market to realize the carry trade< Summary:
1. High interest currency and high leverage make carry trade possible
2. Most of the time, there is triple interest on Wednesdays, but some currency pairs of brokers will do triple interest on Thursdays. You should pay attention to it
3. Pay attention to the interest multiple ring holidays
4. Some of the same currency pairs, whether you sell or buy, may have negative interest rates. The main reason is that the buying and selling interest rates of the two currencies are different. In fact, it is also the comparison of the four interest rates. The interest rate of buying currency a is the interest rate of selling currency B; Interest rate for buying currency B - interest rate for selling currency a.
when we deposit our funds in the bank, we will generate deposit interest, while when we borrow from the bank, we will generate loan interest. Foreign exchange transactions buy currency pairs. When you buy euro / US dollar, you actually buy (deposit) euro and sell (borrow) US dollar to pay for the transaction. Therefore, whenever overnight, there will be overnight interest. Of course, if you build and close a position on the same trading day, there is no overnight interest
is the overnight interest income or expense
when the customer holds the order overnight, the overnight interest will be generated. The positive value indicates that you can get a certain amount of overnight interest, and the negative value indicates that you need to pay a certain amount of overnight interest. Why are there positive and negative
each foreign exchange transaction involves two currencies, and each currency has its own interest rate. When the interest rate of the purchased currency is higher than that of the sold currency, you can earn overnight interest ("positive overnight interest"). But if the interest rate of the bought currency is lower than that of the sold currency, you need to pay overnight interest ("negative overnight interest")
therefore, overnight interest may increase your transaction cost and your profit<
calculation time of overnight interest
the calculation time of overnight interest is displayed in different time zones on the websites of different brokers. The main reason is that the locations of brokers' companies are different, but in fact they are all one point
as shown on McKenzie's website, 5:00 p.m. Eastern (New York) time is converted to 5:00 a.m. Beijing time; Ruixun bank is 23:00 CET, converted to Beijing time is also 5:00 am Beijing time; Gkfx will settle at 10:00 p.m. British time every day, which is converted to 5:00 a.m. Beijing time
of course, these are all summer time, and winter time is 6 a.m. Beijing time. So for the settlement time, it will be 5:00 a.m. Beijing time in summer time (current time) and 6:00 a.m. Beijing time in winter time
based on daylight saving time, any position created at 5:00 a.m. will be regarded as overnight position and overnight interest will be calculated. For positions established at 5:01 am, overnight interest will be calculated the next day; For positions established at 4:59 a.m., overnight interest is calculated at 5:00 p.m<
calculation of overnight interest
on the calculation of overnight interest, some brokers provide direct amount, while some brokers provide interest rate,
calculation of direct amount:
the quoted price of selling and buying overnight interest of Euro and US dollar on that day is: 0.64-1.800,
then it means: when your position is selling one euro and US dollar, Then your trading account will get $0.64. When you buy one hand of Euro dollars, your trading account will need to pay $1.80.
calculation of interest rate:
let's take an example: suppose you buy three hands of GBP / USD on Monday, the market price is 1.7718/1.7722, and you stay overnight until Tuesday, where the pound is a high interest currency, The interest rate of the US dollar is lower than that of the British pound. For example, if the interest difference is prmbuy 0.42% (annual interest difference), the customers who hold pounds will earn interest,
the calculation method is as follows: 0.42% / 360x10000x3 hand x1.7722x1 days = $0.62, that is, the average annual interest to day * corresponding account funds * hands * buy (sell) price * interest days
Where does the interest rate come from? Some are offered by a number of banks, in accordance with the interest rate swap. Generally, the interest rate will not change in the current day. However, when the market is extremely volatile, the interest rate may change in the current day<
triple interest rate on Wednesday
most banks around the world are closed on Saturdays and Sundays, so overnight interest on foreign exchange positions is not calculated for these two days, but most banks still calculate the interest for these two days. For this reason, the foreign exchange market will calculate the three-day interest on the overnight position on Wednesday, so the interest on the overnight position on Wednesday is generally three times that on the overnight position on Tuesday
why Wednesday
this is mainly because according to international practice, foreign exchange transactions are settled after two trading days
Monday: one day overnight interest. Trading on Monday, settlement on Wednesday, position on Monday to Tuesday, settlement day from Wednesday to Thursday, so 1 day interest should be paid / charged
Tuesday: one day overnight interest. Positions are held from Tuesday to Wednesday, and the settlement date is from Thursday to Friday, so 1 day interest is paid / charged
Wednesday: 3-day overnight interest. The position is open from Wednesday to Thursday, and the settlement day is from Friday to next Monday, so the interest is paid / charged for 3 days
Thursday: one day overnight interest. Positions are held from Thursday to Friday, and the settlement day is from next Monday to next Tuesday, so 1 day interest is paid / charged
Friday: one day overnight interest. The position is open from Friday to next Monday, and the settlement day is from Tuesday to Wednesday, so only one day interest is paid / charged
it should be noted that the overnight interest of some currency pairs on some brokers is calculated as three-day interest on Thursday<
for holidays
there is no overnight interest on holidays, but the overnight interest for an extra day is calculated two working days before the holiday. Generally speaking, when the currency involved in the transaction encounters an important holiday in its country, the overnight holiday interest will be calculated. For example, on the fourth of July, the Bank of America suspended its business, and the positions of all dollar currency pairs were located at 5:00 p.m. on the first of July to calculate the overnight interest for an extra day
carry trade
when we talked about currency pairs in detail, we once said why high interest currencies should be divided separately. An important reason is that there is the possibility of carry trade in high interest currencies. At the same time, we can make use of the interest rate gap of different countries and the high leverage advantage available in the foreign exchange market to realize the carry trade< Summary:
1. High interest currency and high leverage make carry trade possible
2. Most of the time, there is triple interest on Wednesdays, but some currency pairs of brokers will do triple interest on Thursdays. You should pay attention to it
3. Pay attention to the interest multiple ring holidays
4. Some of the same currency pairs, whether you sell or buy, may have negative interest rates. The main reason is that the buying and selling interest rates of the two currencies are different. In fact, it is also the comparison of the four interest rates. The interest rate of buying currency a is the interest rate of selling currency B; Interest rate for buying currency B - interest rate for selling currency a.
9. Foreign exchange transactions have overnight interest. The specific interest is calculated according to the currency pair you buy.
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